Hotel Business
Kor Hotel Group Building Two Brands
March 7-20, 2007

LOS ANGELES-As the industry's luxury tier has grown increasingly competitive the past few years, branding has become more and more critical prerequisite for success. For a hotel company, building one luxury brand is a challenge, building two at once is monumental. But with its Viceroy and Tides brands, this is precisely the task the Kor Hotel Group's management team has set for itself. With 19 hotels and resorts in its overall portfolio, Kor, based here, already has Viceroy Hotels open in Santa Monica and Palm Springs, CA, and Viceroys under construction in downtown Miami and Miami's South Beach as well as two in Mexico and one on Anguilla in the British West Indies. The company, meanwhile, has a Tides open in South Beach and one under construction in Mexico. A second Mexican property, acquired in mid-2006, will be rebranded a Tides later this month.

The remainder of Kor's portfolio is comprised by-and-large of independently named hotels, ranging from the Avalon in Beverly Hills, CA, to the Loden in Vancouver, which is presently under construction.

"The strategy going forward is to remain an eclectic collection of hotels in different sizes and shapes. All have some type of interesting design component and all try their best to be best-in-class from a service stand-point," said Nicholas Clayton, who was named president of the hotel group last September. "From this portfolio, we've derived the Viceroy and Tides brands, each of which has a clear identity and strategy behind it. One day, another brand may emerge from the portfolio, but today it's these two."

Eclectic as well is the ownership picture. Kor wholly owns and manages some hotels, has a partnership stake - and manages - some, and manages still others under third-party contracts. "We remain open to the right level of ownership, if any, given each scenario," noted Clayton, who joined Kor from the Mandarin Oriental Hotel Group, based in Hong Kong, where he was senior vp of operations.

At the Viceroy Icon Brickell in downtown Miami, for example, Kor is a minority shareholder, partnering with the majority shareholder and developer, while at Loden in Vancouver it will be solely the manager. "By not having just one model, we invite more opportunity," he added.

Kor's hotel business grew out of a broader real estate development and management firm called the Kor Group.

"Because our roots remain in the real estate business, we believe that real estate, when well developed, adds value and can certainly be worthwhile from a profit margin standpoint," Clayton noted. "This isn't meant to minimize our value as third party managers, but, yes, it comforts people when you have an ownership interest because it makes your attention and focus that much sharper."

A number of Kor projects also combine lodging and residential in a mixed-use scenario, the Viceroy Icon Brickell being one. In that project, the hotel will occupy nine floors of a 53-story condominium residential building, the third of three Icon towers to be built. In addition, four floors will contain Viceroy-branded hotel condo residences, owners of which will have access to hotel services.

Clayton stressed the importance of design to the Kor strategy. "As the luxury market has grown more competitive, design has becomes a kind of differentiator," he explained. "Design incites trial. If you don't have an interesting design, you won't even get trial in today's world. But if you get trial through design, you get repeat business through service and consistency of service. It's as simple as that." On many projects, Kor has worked with - and in aficionados' minds become associated with - the firm of Kelly Wearstler Interior Design.

Design, therefore, can't be a luxury hotel's only strong suit. "I've seen so many projects where design was the only consideration and the only back-up when it comes to guest recognition," he noted. "In the end, that's not enough to make the hotel successful."

Another misconception concerns demographics. Clayton said that Kor's hotels were meant to appeal to Gen X travelers, but hardly to the exclusion of the earlier generation.

"The more senior person today is definitely different than the senior person yesterday. They're more in tune to what the trends are. Speaking of design, for example," he said. "Consequently, we're not just marketing to a youthful audience, it's a broader spectrum. It goes to a higher age bracket than 40 certainly.

"Actually, our hotels attract a broad mix of people, which is how it should be," he continued. "At the same time, one hotel design or location might attract a different demographic of customer than another, but that's not our intent. Our intent with Viceroy and Tides is to look at the hotel, the location, the feeder markets, and create something relevant for the future for a luxury clientele, regardless of age."

As luxury brands, Viceroy and Tides aspire to provide high levels of guest service, but the fine points of the hotels' service and amenity profile are still a work in progress. "Many of the hotels in the current portfolio were adapted within a building, an architecture that already existed," explained Clayton, who early in his career served stints at Four Seasons Hotels & Resorts and the Ritz-Carlton Hotel Co. "By comparison, out new projects don't have the constraint of an existing building. Being green field sites, it's going to be much easier for us to spec and then build what is top-end luxury today. It's more costly when it's from the ground up, but it's more advantageous."

The underlying commitment is already there. "The fundamental building blocks of a strong service philosophy are already in place, the conviction of the group at all levels to make quality service are number one priority."